In this study, we employ in vitro models to study: a) the factors involved in the differentiation of pancreatic precursor cells into hormone-producing cells of the islets of Langerhans and their mechanisms of action with a goal to develop a system that could be used for cell replacement therapy for patients with diabetes mellitus; and b) the transcription factors and signal transduction cascades that are involved in the pathogenesis of pancreatic cancer. During this year, we reported the following. 1) We developed an in vitro culture system in which we were able to induce differentiation of human pancreatic adenocarcinoma PANC-1 cells. This may be a way to treat these cancers as differentiation of cancer cells leads to a phenotype that is less prone to proliferation and metastasis. 2) We did a follow-up study in which we discovered that a specific cell-produced factor plasminogen-activator inhibitor-1, which has been associated with different states of pancreatic cancer in humans, can be the target to induce differentiation of PANC-1 cells. This is important since development of drugs that inhibit the activity of plasminogen-activator inhibitor-1 may be a new approach to the treatment of pancreatic cancer.